If you’re reading this article, you’ve obviously heard about binary options. It’s becoming harder and harder not to as this form of investing has spread in popularity all over the world in a fairly short amount of time. In large part, it’s because binary options can offer such high payouts in such a short period of time. That being said, if the only reason you want to get into binary options trading is for huge payouts every day, you probably need a reality check. Instead, here are four factors to consider if you’re thinking about trading binary options.
You’ve Traded Stocks Before
This isn’t necessarily a prerequisite to trading options, but we’d be remiss if we didn’t bring it up. Although we’re obviously biased toward binary options, there’s no doubt that beginning with trading stocks will help you develop a solid framework. Trading binary options is a fast-paced game where you never hold a position for long (sometimes just 60 seconds). Slowing things down will make it easier to develop fundamentals and a feel for the market.
If you haven’t traded them before, consider doing so. In either case, we recommend moving on to trading binary options only after you hit a 50% success rate.
You Have 40 Hours to Learn About Binary Options
This is an arbitrary number on our part, but we believe it hits home the fact that you can’t just start trading binary options unless you understand this unique form of investing. It’s not just buying high and selling low like in stocks. There are countless ways to make money with options which include things like signals, overall strategies and complicated trades that involve more than one call or put.
Spend at least 40 hours learning about binary options trading and all it entails before you so much as touch a demo account. Otherwise, you’ll become overwhelmed and quit prematurely or even lose money.
You Have at Least $1,000 to Begin
Binary options are actually fairly affordable to begin with when you compare it to other types of investing. We’d recommend $1,000 to start with, but that will be enough to open an account with a broker (which is roughly $200 to meet the minimum deposit) and make roughly 50 trades.
Trying to get into binary options trading with less than $1,000 is probably not worth it. At first, you’ll be lucky to hit a 60% win rate, so that should give you some idea of how much it will cost you just to play.
You’re Disciplined
This is probably one of the most overlooked aspects of trading binary options, at least by beginners. We’re not just talking about the ability to leave your emotions out of your trades either. That should go without saying. Never trade out of anger, fear or excitement.
However, you also need discipline because, as we just touched on, the market is going to be rough when you first start. You’ll barely break a 50% win streak and may even dip below, meaning you’d have been better off flipping a coin.
These are the growing pains you’re going to go through as you learn binary options. You need discipline to pick a proven strategy and apply it without wavering at the first sign of trouble. If you immediately jump ship every time things get a bit choppy, you’ll never learn the ropes.
There’s no doubt that trading binary options has a ton of potential and can be a lot of fun too. Just be sure that, before you invest any of your hard-earned money, you consider whether or not options are a good fit for you right now.
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